U.S.A. LOAN TO BRITAIN

Greymouth Evening Star, 5 December 1945, Page 5

U.S.A. LOAN TO BRITAIN

POSSIBLE TERMS REVIEWED HARD BARGAIN EXPECTED (N.Z.P.A. Special Correspondent.) (Rec. 9.40 a.m.) LONDON, Dec. 4. Britain is awaiting the BritishAmerican financial agreement without any degree of enthusiasm. During the long weeks when negotiations were proceeding in Washington, and when conflicting reports that an agreement had or had not been reached, comment was largely withheld here. Although it is still regarded as premature, some comment is being made on the information from Washington, published by newspapers. This is that it is proposed the United States shall place at Britain’s disposal a credit of between nine hundred million sterling and one thousand million sterling. This would be repaid with interest of 2 per cent., in fifty annual instalments, beginning by 1950, with provision that in the years when Britain’s balance of trade is shown by impartial accounting to that below a given figure, interest would be waived. It is further proposed that the United States shall lend Britain an additional £125,000,000 sterling with which to buy lend-lease supplies that were in process of being transferred from the United States to Britain when lend-lease ended. Publication of the terms of the proposed loan—and it will continue to be a “proposed loan” until it is ratified by Congress—Will be the signal for a start both in Britain and the United States of one of the historic post-war debates. A whole world system, it is remarked, hangs upon the success or failure of the proposals, which the British and American financial economic experts hammered out during twelve weeks of negotiations in Washington. Apparently there is still doubt whether the British Cabinet will agree to the American proposals, one of the chief difficulties being the question of scaling down the sterling balances owed to Empire countries. If a final agreement is not reached, then Britain will face the post-war world alone with the Empire. If the proposals are accepted by Britain, then it is expected a Bill ratifying the Bretton Woods agreement will be presented to Parliament for immediate action. But there is every indication there will be much objection to that on -the grounds that Britain will be tied too closely to the American financial machine. EFFECT OF PROPOSALS Discussing the reported proposals, the “Manchester Guardian” says: Principal conditions can be guessed: Firstly, Britain to make an attempt to obtain drastic reduction of the three thousand five hundred million sterling balances which accumulated as the result of war expenditure, to the credit of many Empire and foreign countries. Secondly, the Bretton Woods scheme is to be ratified before payment. Thirdly, the world trade “charter” under which both American tariffs and British Empire preference duties are to be lowered must be accepted in principle, and laid before the international conference next year. It adds: America was pressing for Britain freely to convert wartime balances into all other currencies. “The cost of yielding may be the end of sterling as an international currency. As for Bretton Woods, the critical point is that the pledge to abandon foreign exchange .controls within five years makes us dependenton the future wisdom and stability of the American people. We should have preferred to await the outcome of the .world trade conference for some proof that they are willing to make large and genuine cuts in their import tariff which is the world’s greatest trade obstacle, before we trusted ourselves to the uncertain tide. It is no use pretending that recent events have not shaken our faith a little. On the whole, however, we shall have to accept this settlement because we cannot afford to drift into a trade conflict with the United States.” Christopher Hollis, M.P., in an article in the “Evening Standard” says: Bretton Woods means a RETURN TO THE GOLD standard under which Britain would be conjpelled “to return to gold, and render’itself liable to sanctions from all the world, including the Dominions, if it should ever subsequently leave gold. It would return to gold when the United States holds twentythree billion of the twenty-eight billion dollars of gold in the' world and when the problem of finding goods and services which are acceptable on the American market has by no means been solved. Britain would then be accepting the gold standard at a time when the size of her holdings will be dependent upon American goodwill, and when she may well have no alternative but to make payments in gold for American goods received. “Bretton Woods will create conditions under which our problems can never be solved. It spells goodbye to all hopes of prosperity whether under the Socialist or capitalist system. This pact may well prove a suicide pact between the last two great nations of the world. What is the alternative? Let us remain friends of the United States, let us trade with her exchanging goods and services against goods and services to our mutual convenience, but if she demands to invade the most ancient of all sovereign prerogatives—our right to control our own monetary supply,—let us say firmly and courteously to her ‘hands off.’ ”

SUPPORT FOR MISSION. LONDON, December 3. “The Times,” in a leading article, said: The sudden flight of Sir Edward Bridges to Washington strongly suggests that the financial talks are reaching a climax there. There is an urgent need for a strong rebuttal of the allegation that the only impediment to an effective economic agreement is opposition on the part of Socialist Ministers in London to the unshackling of British trade. British opinion will not be misled by these distortions. But there is no smail danger that an unfortunate impression may be produced in America. Whatever the terms of the agreement that may soon be signed, no genuine understanding will be possible unless opinion in the United States is fully aware that the issues of State responsibility for the course of foreign trade, and exchanges are a national concern, and not a partisan concern, in Britain. The work of the British mission in America has enjoyed the widest national backing.

UNEXPECTED ISSUES. (Rec. 10 a.m.) LONDON, December 4. TwO unexpected issues are holding up a final settlement of the Washington loan negotiations, says the Press Association’s diplomatic correspondent. The issues raised by the Americans are regarded as sufficiently substantial to jeopardise the talks and completely wreck the chances of agreement if the Americans are adamant. The negotiations, therefore, are still in the balance, but London political circles are optimistic that the difficulties will be overcome, although perhaps not so optimistic as reports from America suggest. The British Cabinet’s attitude and comments on the new position reached Washington to-day. The next move is with the Americans. The Cabinet met to-day to consider the proposed terms for the United States loan to Britain. A political correspondent says that official opinion in London indicated that the area of disagreement is narrowing somewhat. The Prime Minister (Mr Attlee) told a questioner in the House of Commons that all the interests likely to be affected could not be consulted before a decision was reached, but there would be an opportunity in the House for discussion. CANADIAN.LOSSES. (Rec. 10.0 a.m.) VANCOUVER, December 4. The “Vancouver Sun” declares that Canada is becoming the victim of a gigantic Power* play between the sterling area and the dollar bloc, which had already cost British Columbia the loss of several trade contracts and may cost many more before the settlement is reached, because Canada is. outside the sterling area. Several British Columbia firms have been refused import licenses by South Africa and New Zealand, and Britain has cancelled the majority of dehydrated food contracts.

CANADIAN CREDITS ’“OTTAWA, Dec. 3. ' A Bill providing 650,000,000 dollars increase on tne previously authorised hundred million for. export credit loans to the Allies, was read a first time. Mr. Usley said the object of the loans was designed to aid devastated countries and provide long term basis for expansion of Canadian trade. The amounts proposed include (all million dollars): France 242, Netherlands 85, Norway 30, the balance to be allotted to Belgium, China and Russia. Already three million was advanced to Russia for purchase of hydro-electric plants. - ■ : Mr. Usley said that in settling the loans, Canada must accept many more imports than before the war. The Government was protecting Canadian exporters against risks but there was the onus on manufacturers and others to meet world competition in assuring Canada a proper place in the export market. The British delegation at present in the United States was due soon at Ottawa, when credit plans for the United Kingdom would' be' negotiated. '• A